If UIP holds, the foreign interest rate is 6%, and the home currency is expected to appreciate by 2%, then the home interest rate is:
a. 10%
b. 8%
c. 4%
d. 3%
Ans: c. 4%
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Use the following table for a certain product's market in Marketopia to answer the next question.Quantity Demanded DomesticallyPriceQuantity Supplied Domestically1,400$102,2001,60092,0001,80081,8002,00071,6002,20061,4002,40051,200If the world price of the product is $6 and a tariff of $1 per unit imported is imposed, then the quantity of output that would be supplied domestically would be ________ units and the quantity of output that would be imported would be ________ units.
A. 1,600; 400 B. 1,400; 800 C. 1,400; 400 D. 1,600; 800
Refer to Table 5.1. Hector has a comparative advantage in the production of
A) bracelets. B) tiaras. C) both products. D) neither product.
If a good is price elastic, an increase in price will increase total revenues
Indicate whether the statement is true or false
Special Drawing Rights
A) are granted by the Fed to banks which want to trade in the foreign exchange markets. B) were eliminated when the Bretton Woods system broke down. C) are created by the IMF in its role as lender of last resort. D) were created by the Nixon administration on August 15, 1971.